Category: eco

In “Markten in beweging” deze week:

• IMF-voorzitster Lagarde waarschuwde deze week voor het risico van deflatie. De Amerikanen lijken zich hier voorlopig niet veel zorgen over te hoeven maken, maar in Europa ligt dat anders.
• Oplopende geldmarktrentes vormen een tweede reden waarom de ECB mogelijk opnieuw in actie gaat komen.
• In Focus: het wel-en-wee van de internationale economie lijkt dit jaar in belangrijke mate te worden bepaald door de stuurmanskunst van politici en centrale bankiers.

Lees hier verder.

US housing starts fell 9.8%MoM in December to 999k (saar). This is merely a correction of last month’s implausible jump (which was in fact revised further upwards). The generally more reliable single-family component of starts also fell back after a November surge and ended the year at 667k (saar), still up 7.6%YoY. This is not bad at all, given the cold weather in December and increasing mortgage rates.

Housing permits also retreated a bit MoM. The momentum is clearly weakening, with YoY-growth rates in permits down to 4.6%, from double-digit growth figures just a few months back.

Looking ahead, we expect the recovery of housing construction to continue in the new year at a more moderate pace. Mortgage rates have hardly moved following the actual decision to taper in December. But due to increases earlier in 2013, fixed rates are substantially higher than a year ago. For example, the 15-year fixed mortgage rate is 3.5% today versus 2.7% a year ago. This has resulted in declining numbers of mortgage applications since May last year. That said, mortgage rates remain very low and the recovery of the US economy seems to be broadening. We therefore expect demand for new homes to remain firm. Construction activity will likely continue to increase, albeit at a slower pace than we were used to until recently.

August US home prices as measured by the Case-Shiller 20-City index posted a better than expected 0.9%MoM gain (sa). In YoY-terms, prices rose 12.8%, up from 12.3% in July. This was another month with almost too-good-to-be-true price increases. And indeed we think this will not last. We expect price increases to decelerate in the coming months as higher mortgages rates make themselves felt. While prices are a lagging indicator, we are already seeing signs of a cooling housing market in other indicators, such as stalling homebuilder confidence and yesterday’s fallback in September pending sales. Since the September “no taper after all”-FOMC meeting, mortgage rates have come down slightly again, but 15/30-year fixed rates are still 50-70bp higher than at the start of the year. Mortgage applications for purchases have stabilised since the Summer, at about 10% below volumes seen in the first months of the year.

All of this means that demand is easing in the face of higher mortgage rates, but has not collapsed. As the housing market adapts, it shifts into a lower gear. This is not an unwelcome development. With low rates and buoyant sentiment and prices, a new housing craze seemed to be in the making this Spring. That danger is now disappearing, as the housing market moves into more gentle waters. It will be interesting to see how the Yellen Fed is going to weigh housing market developments in its tapering decision making.